After some searching I found this has been reported before but seems it has not been fixed as I'm having the same issues:
https://community.spotify.com/t5/Ongoing-Issues/BUG-ANDROID-Storage-usage-reported-incorrectly/idi-p...

To summarise despite Spotify seemingly using the SD card for storage of offline music and cache, so not using the internal memory, it confuses Android 6.0.1 into thinking the cache is on the internal memory. It gets to the point that the OS reports the phone is full and apps cannot update etc. Reinstalling the app clears the cache so frees up the internal memory but does not appear to fix the underlying problem, so it slowly starts to fill up the internal memory again. Also reinstalling means all offline music has to be downloaded again which is inconvenient.

Can we get a fix for this?